The price of AriZona tea hasn't budged for 30 years
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23 ounces of AriZona iced tea is a lot of iced tea — it's 680 ml, or more than 90% of the liquid in a bottle of wine. And you can buy it for 99 cents in gas stations and corner stores across the country, the same price that it's been for 30 years.
Why it matters: The stubborn refusal of the drink's manufacturer to raise prices has everything to do with the fact that it's controlled and owned by a single billionaire, Don Vultaggio, who has no fiduciary duty to maximize profits or shareholder value.
Flashback: Vultaggio spent seven years fighting with his co-founder, John Ferolito, who wanted to be able to sell his stake in the company to a major multinational like Tata Global Beverages, Nestlé, or Coca-Cola. Vultaggio won the fight, and Ferolito ended up having to sell his stake back to the company for a mere $1 billion or so — significantly less than the big companies were offering.
The big picture: The main force holding AriZona inflation at bay is the sheer stubbornness of Vultaggio, and his attachment to the way in which the 99-cent can effectively markets itself.
- Against that is inflation itself — especially in the prices of aluminum, for his cans; corn syrup, for his drinks; and diesel, for transporting his wares to wholesalers.
Between the lines: The result is much tighter margins, every year. But why would a billionaire need fatter margins? Like all billionaires, Vultaggio has certainly done extremely well in the markets in recent years, and more money wouldn't buy him more happiness — especially if it meant giving up the 99-cent price point that he's clung to for 30 years.
The bottom line: Public companies are under constant pressure to improve margins in a way that family-owned companies often aren't. But family ownership can come with other pressures of its own.
